A decrease in demand and an increase in supply will lead to
A) unambiguous increases in both price and quantity.
B) unambiguous decreases in both price and quantity.
C) an unambiguous decrease in price, but the effect on quantity is indeterminate.
D) an unambiguous decrease in quantity, but the effect on price is indeterminate.

Question

Quizplus · Accepted Answer

A decrease in demand and an increase in supply will lead to a surplus in the market, which will put downward pressure on price. However, the effect on quantity is indeterminate as it depends on the extent of the decrease in demand and the increase in supply.

A Decrease in Demand and an Increase in Supply Will